Shares in Nufarm soared after the agricultural chemical and seed company posted a 14.6% rise in full year profit to $43.22 million despite weaker market conditions.
A short time ago, its shares were trading at $7.65, up more than 8%. The result was on a 4% increase in revenue to $2.74 billion.
Market conditions were generally weaker because of a fall in crop prices and lower demand for insecticides. The company’s cost cutting program saved $73.8 million in the 2015 financial year.
“The combination of cost savings benefits; margin expansion and revenue growth in a number of the company’s businesses is expected to result in another solid profit performance in 2016,” the company said in a statement.
“This is despite an expectation that general market conditions will continue to be subdued.”
The target for cost savings in 2016 is $20 million.
The company has also factored in the likely impact of an El Niño weather pattern in 2016. The Bureau of Meteorology reports that El Niño is strengthening.
“This weather pattern typically results in drier than normal spring conditions in Eastern Australia; more reliable rainfall patterns in Western Australia; and higher rainfall in South America,” the company says.
“Given Australia is cycling several years of relatively dry spring conditions, the additional impact on the Australian business is expected to be marginal. The impact in Brazil is likely to result in stronger demand for both insecticide and fungicide products.”
The company declared an unfranked final dividend of 6 cents a share, bringing the full year dividend to 10 cents, up from 8 cents the year before.
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